Have you thought twice before turning on the central heating this winter? With the average dual fuel bill currently at £1,302 and rising, a house where the heating typically costs just £120 a year sounds too good to be true. But that's exactly what Geoff and Kate Tunstall have built for themselves – a super-insulated "Passivhaus" near Huddersfield that uses up to 90% less energy than standard UK houses.

The pair were living in a draughty Victorian cottage in the village of Denby Dale, in the foothills of the Pennines, and wanted to build a property at the bottom of their garden to which they could retire. Most importantly, they wanted something low-energy, cost-effective, warm and easy to maintain.

Their first thought was to build a dormer bungalow because, says Kate, "that's the kind of place people retire to". Instead, they have a two-storey house – one of the first of its kind in the country – built to be as low-energy as possible. With floor-to-ceiling picture windows, wooden floors and a mezzanine, it's elegant, too, the stone exterior blending in with the neighbouring terraces.

The Passivhaus concept was developed in Germany in the 1990s. Today there are at least 35,000 around the world, but at the time of Geoff and Kate's planning there was none they could visit in the UK. So they went to Austria. "It was early January, -4C outside," Geoff says, "but the houses were light, airy, warm, comfortable. Kate and I looked at each other and said yes."

With a fixed budget of £145,000, the couple worked with architect Derrie O'Sullivan and a local building firm, the Green Building Store, to design the house. Their biggest wish was for a double-height glazed section at the front.

Photograph: Morgan O’Driscoll/Green Building Store

A Passivhaus needs very little energy to run, and the Tunstalls' has been fitted with just one radiator and two heated towel rails, which made them nervous. "Before we moved in, we were intrigued," Kate says. "I think we knew it was going to be low-energy, but the question was, how efficient would it be?" The answer is very, with the end result exceeding even their expectations. A mechanical ventilation system keeps the house at a comfortable 20-21C all year round, and even the kitchen's slate floor didn't require underfloor heating. Last year's £120 heating bill proves their design works, and the couple are happy to be insulated against further price rises by the energy companies. "The fuel bill for the old house, four years ago, was £1,800," Geoff says, "so goodness knows what it would be now."

"Compared with the old cottage, it's chalk and cheese," Kate says. "The only thing that was similar was the depth of the walls – about half a metre thick. But it was draughty, inefficient and hard to keep clean." Low-maintenance living was another priority for the couple, and the house features bamboo flooring and blinds instead of curtains for easy cleaning. Both say the constantly renewed air from the ventilation system makes it feel much healthier to live in, too.

Kate and Geoff's house was the first UK Passivhaus to be built using cavity wall insulation and British vernacular construction methods, and the couple are proud to evangelise about the design. The principles are now being used in social housing, providing low-cost living for people who need it most. The pair have even opened up their own home during November's international Passivhaus open days. "It's important to spread the word," Geoff says, "because it's all talk until you stand in one and experience what it's about." There are now about 30 in the UK and plans to build up to 300 in Barnstaple.

With its insulation and triple-glazed windows, there is, Geoff says, a quiet serenity about the house. "It's subtle, but it's different. We feel very fortunate to live in one."

How Passivhaus works

The Passivhaus design is based on five key principles. Super-insulation is aided by a design that minimises "thermal bridging" – essentially keeping the insulation as continuous as possible, like wrapping the house in a tea cosy. Even heat from cooking, lighting and bodies is efficiently retained within the building. Triple-glazed windows and stringent airtightness also prevent heat escaping, while houses are built with the largest windows facing south, in order to optimise solar gain. Finally, a mechanical ventilation system provides fresh air and recovers heat from the air that is extracted.

• This article was edited on 11 February. The original piece omitted the name of the architect.